Virgin Islands Water & Power Authority v. General Electric International Inc.
561 F. App'x 131
3rd Cir.2014Background
- WAPA sued GE in 2006 for breach of a contract for inspection/repair of power equipment; discovery and mediation followed.
- In May 2008 GE moved to compel arbitration and stay the case; the Magistrate Judge issued an order finding the motion moot based on the parties’ agreement to proceed with discovery and mediation.
- GE did not timely object to the Magistrate Judge’s mootness order under Rule 72(a); about ten months later GE sought a District Court hearing on the motion to compel.
- The District Court concluded the Magistrate Judge lacked authority to decide motions to compel arbitration and, on de novo review, held the contract did not contain a valid arbitration agreement; it denied GE’s motion.
- WAPA argued the failure to follow Magistrate review procedures deprived the courts of jurisdiction; GE contested that the Magistrate’s order only postponed a ruling.
- The Third Circuit found GE waived its challenge to the Magistrate Judge’s order for failing to timely object, and alternatively affirmed the District Court because the contract lacked an agreement to arbitrate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether courts have jurisdiction to review denial of motion to compel arbitration | WAPA: GE’s failure to object to Magistrate Judge’s mootness order waived challenge and forecloses review | GE: Magistrate’s mootness ruling only deferred the motion; district court retained jurisdiction to decide | Court: FAA gives appellate jurisdiction; but GE waived challenge by not timely objecting to Magistrate’s order |
| Whether a Magistrate Judge may rule on a motion to compel arbitration under 28 U.S.C. § 636 | WAPA: Magistrate order was effective; §636 permits non-dispositive pretrial rulings | GE: Such motions are not listed in §636 and thus beyond magistrate authority | Court: Motions to compel arbitration are non-dispositive and within magistrate authority |
| Whether GE preserved objection to Magistrate Judge’s mootness determination by later seeking district review | WAPA: GE failed to object timely under Rule 72(a) and local rules | GE: Later district filing preserved challenge | Court: Failure to timely object waived the challenge; review denied on that ground |
| Whether the contract contains a valid agreement to arbitrate | WAPA: No arbitration clause in the operative contract | GE: Arbitration provision exists in referenced General Terms and Conditions (Dispute Resolution clause) | Court: Clause lacks mutual-assent language and scope; no valid arbitration agreement; denial of motion to compel affirmed |
Key Cases Cited
- PowerShare, Inc. v. Syntel, Inc., 597 F.3d 10 (1st Cir. 2010) (motions to compel arbitration are non-dispositive)
- Washington v. Hovensa LLC, 652 F.3d 340 (3d Cir. 2011) (procedures for preserving objections to magistrate orders)
- United Steelworkers of America v. New Jersey Zinc Co., Inc., 828 F.2d 1001 (3d Cir. 1987) (waiver of objections to magistrate judge orders)
- Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468 (1989) (arbitration is a matter of consent)
- Stolt–Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010) (parties cannot be compelled to arbitrate absent contractual basis)
- Century Indem. Co. v. Certain Underwriters at Lloyd’s, London, 584 F.3d 513 (3d Cir. 2009) (use state contract law to determine arbitration consent)
- Kirleis v. Dickie, McCamey & Chilcote, P.C., 560 F.3d 156 (3d Cir. 2009) (standard of review for motion to compel arbitration)
- Par–Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51 (3d Cir. 1980) (no genuine issue of fact required to compel arbitration)
- Morales v. Sun Constructors, Inc., 541 F.3d 218 (3d Cir. 2008) (Virgin Islands contract law requires mutual assent)